KTFA:

Samson:  Global manufacturers gradually focus on Vietnam

1st July, 2022

Many manufacturers in the global supply chain of major firms are gradually focusing on Việt Nam.

In particular, Apple has moved 11 factories of Taiwanese enterprises in its supply chain to Việt Nam.

Many other firms such as Foxconn, Luxshare, Pegatron, and Wistron are also expanding their production facilities in Việt Nam.

This information was shared at a conference on the situation and proposed tasks and solutions to remove difficulties and support production and business in the last six months of this year, organised by the Ministry of Planning and Investment this week.

Samsung built its largest research and development centre in Southeast Asia worth US$220 million in Hà Nội and is also planning to continue to expand factories in the northern provinces of Bắc Ninh and Thái Nguyên.

Earlier this year, Đồng Nai Province granted investment licences for two $100 million projects of a component supplier for Samsung, Hansol Electronics Việt Nam (South Korea).

To seize the opportunity, Đỗ Thị Thúy Hương, Vice President of the Việt Nam Association of Supporting Industries (VASI), proposed the Government have large-scale selective policies to attract big foreign groups to Việt Nam. However, these policies must be accompanied by "clean" production conditions, environmental protection and no discharge into the environment, she noted.

Hương also recommended several issues, such as more supportive policies to improve labour quality and authorities needing to create more favourable conditions for businesses to access credit support policies of the Government. 

Previously, Hương said that the root cause of the shifting trends of supply chains to Việt Nam largely came from China's relatively developed electronics and information technology industry. She explained that they had grown to more than just assembling in the global supply chain.

Việt Nam was a country quite similar to China in electronic manufacturing activities, both in terms of labour and geographical location, infrastructure, and logistics and would be very suitable to receive capital flows, which was also a technological shift.

The VASI Vice President said that, regarding the attraction of large foreign companies, in the early stages, when domestic enterprises were still weak, FDI should be allowed in but must be regulated.

It was necessary to have the hand of the State not only to support foreign businesses but also to have an incubator to support Vietnamese businesses so that they were capable of receiving technology and gradually mastering the technology to have the ability to compete and keep in domestic market, she added. If enterprises were not strong enough, they could not protect their "soft resources," which was their market, said Hương.    L

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Samson:  International organizations hail Vietnam’s economic achievements

8th July, 2022

HSBC has raised its forecast for Việt Nam’s economic growth this year to 6.9 per cent, from the previous prediction of 6.6 per cent, which is possibly the fastest pace in the region.

In the Việt Nam At A Glance report in July, HSBC Global Research noted that decreasing risks posed by the Omicron variant and eased restrictions have paved the way for Việt Nam to return to normality.

Thanks to widespread recovery, the country recorded an impressive GDP growth rate of 7.7 per cent in the second quarter compared to the same period last year. The service sector, which has suffered severe economic impacts, have bounced back strongly while manufacturing has continued growing and exports hit historic highs. However, the growth forecast for 2023 was revised down to 6.3 per cent from 6.7 per cent due to growing risks, especially in the energy sector, according to the bank.

HSBC Global Research pointed out growing impacts of soaring energy prices. Escalating goods prices have led to a trade deficit in Q2 and may worsen the current account situation, which is already pessimistic. On the other hand, though household consumption has recovered steadily, people’s budgets may suffer from high oil prices, thus decelerating the recent recovery speed.

Việt Nam’s inflation is forecast to stand at about 3.5 per cent this year, but it may surpass the ceiling of 4 per cent between Q4 of 2022 and Q2 of 2023, requiring the State Bank of Vietnam to begin normalising monetary policy.

According to the report, Việt Nam has benefited from its economy reopening, and domestic demand has returned while external drivers remain favourable. However, it is necessary to stay alert to increasing growth risks, especially those posed by surging energy prices.

Meanwhile, the Executive Board of the International Monetary Fund (IMF) has highly valued Việt Nam’s policy support to cushion the impact of COVID-19 in tandem with successful maintenance of fiscal, external, and financial stability and an impressive vaccination rollout.

In a press release following a recent consultation with Việt Nam, the IMF Executive Board said a recovery is underway and high frequency indicators point to stronger momentum going into 2022, with rising retail sales, industrial production, and firm entry. Growth is expected to reach 6 per cent in 2022 as activity normalisation continues and the programme for recovery and development is implemented. However, the recovery of the labour market is lagging as underemployment remains high. While inflation has recently picked up due to rising commodity prices and supply-chain disruptions, it remains well below the central bank’s inflation ceiling.

The Executive Board called for agile policy making, proactively adjusted to the pace of the recovery and evolution of risks. They also underscored the need for fiscal policy to take the lead and be flexibly adjusted to evolving economic conditions. They welcomed the programme for recovery and development and emphasised the importance of targeting, spending efficiency, and steadfast implementation.

The IMF executive board stressed the need for monetary policy to be nimble and vigilant of inflationary risks. They also emphasised the importance of addressing problem loans, normalising regulatory forbearance in a timely fashion, and closely monitoring real estate sector risks.

They welcomed Việt Nam's recent steps towards greater exchange rate flexibility and monetary policy modernisation and encouraged continued efforts in this direction. The board stressed the importance of structural reforms to improve the business environment, enhance productivity, and boost potential growth. They also praised Việt Nam’s ambitious environmental agenda and urged the translation of targets into concrete policy actions.   LINK

Samson:  Vietnam to do well economically this year and the next: AMRO

6th July, 2022

Việt Nam is expected to come out second only to the Philippines in terms of projected GDP for 2022 and on top for 2023, according to a recent Quarterly Update of the ASEAN +3 Regional Economic Outlook.

Specifically, the country was projected to achieve a growth rate of 6.3 per cent this year and 6.5 per cent next year, well above the region-wide figures which were estimated at 4.3 per cent and 4.9 per cent respectively.

Compared to the previous update, Vietnamese growth rates were revised downwards to reflect the lower growth forecasts for China and the US, its major trade partners. The country was expected to top the list with growth rates of 6.5 per cent and 7.0 per cent in the April update.

“Việt Nam is a much more open economy and very exposed to the US and Chinese economies. Because we are expecting reductions in growth rates in these countries and the expected slowdown would affect its external demand, we have to shift down projected growth rates for Việt Nam," said Hoe Ee Khor, chief economist of the ASEAN+3 Macroeconomic Research Office (AMRO).

The Russian military operations in Ukraine have been pushing up commodity prices and global inflation. Relentless cost-push pressure, coupled with firming domestic demand, is expected to drive regional inflation higher this year, at 5.2 per cent.

Regional inflation is projected to moderate to 2.8 per cent in 2023 as tight monetary policy taken by various economies will take effect and the pandemic is showing signs of receding. 

AMRO expects that Việt Nam will keep inflation rates well below 4 per cent by means of price control. It estimates the figures at 3.5 per cent in 2022 and 3.3 per cent in 2023.    

"Việt Nam has a fiscal base to be able to keep prices down and afford subsidies for now. At the same time, it can also use fiscal policy to stimulate the economy. There is a need for infrastructure investments in the country, so it can pump prime the economy to make domestic demand stronger," the chief economist added.

A sharper deceleration in China's consumption and realty activities, according to AMRO, would significantly drag down the economy, with spillovers that would further undermine regional outlook. 

Additionally, mounting prices in the US have caused the Federal Reserve to adopt contractual monetary policy at a faster pace than expected, raising concerns of an imminent recession. Financial investors have switched to safe assets and risk aversion has spiked, leading to capital outflows from emerging markets. "Navigating this formidable environment, ASEAN+3 policymakers are now facing difficult policy trade-offs as they balance the need to sustain the growth momentum while containing the inflationary pressure," Khor added.

Japan, Korea and Myanmar are expected to enjoy growth rates of less than 3 per cent this year, whereas Việt Nam and the Philippines will be riding high with growth rates of over 6 per cent. The other eight countries fall between 3 and 6 per cent.

Regarding inflation, China and Japan are expected to do well with inflation rates kept under 3 per cent in 2022. Meanwhile, Thailand, Myanmar, Laos and Cambodia will have their rates surpass 6 per cent. The other seven countries fall between the two ends.  LINK